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What’s the purpose of purpose?

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I am passionate about running purpose-driven businesses. I get asked a lot, why? What’s it about and why bother? Here’s what I’ve learned. The purpose of business-purpose is to both run better companies, and to run companies better.

Image by Eventive Photography

Purpose-driven companies make a positive difference in the lives of their employees, their communities, and the world. At Virgin, we focus on diversity and inclusion, giving back to communities, and many important global environmental and social issues – from climate change to LGBT rights to ending the war on drugs.

But that is only half the story. Purpose-driven companies run better. How?

Employees are happier. We’ve found that many Virgin businesses have significantly higher rates of employee engagement and retention than industry averages. This is wonderful for moral – and productivity. Keeping a great team together is key to any businesses success. That’s not just my opinion, the experts back it up. Recent research at Harvard shows that companies with a ‘higher purpose’ are more than three times as likely to retain their employees.

Image from Chase Jarvis

Being purpose driven also aligns your business better with your customers. Edelman’s recent Trust Survey found that 87 per cent of global consumers believe businesses should put at least as much emphasis on social interests as business ones - and doing this is something that you can demonstrate through your purpose.

For example at Virgin Money in the UK, the purpose - Everyone Is Better Off – is deeply embedded in the culture and decision making across the bank. The CEO leads the charge and ensures that all business strategies aim to ensure that customers, employees as well as shareholders benefit in a balanced manner. As a result, over the last five years, the bank has seen in the last employee engagement scores almost double, customer satisfaction rates shot up and turnover reduced by more than 30 per cent.

Image from Virgin Money

So we know that being purpose driven provides a company the competitive edge, staff confidence and strong innovation. While this is intuitive, it’s also supported by experience. Our friends at Unilever have found that their Sustainable Living Brands grew 30 per cent faster than all other brands at the company in 2015. It’s also good for moral. Deloitte found that companies with a strong sense of purpose were almost twice as likely to be confident about business growth in both the short and long term.

Business purpose drives better companies, and in turn it helps companies run better.